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A top manager at Metro created a $140,000-a-year job for a friend whose California-based company had received stimulus funds and contracts from the transit agency — including one for $50,000 that paid for the design of a single banner hanging in Metro’s downtown headquarters.

When a watchful employee repeatedly attempted to warn Metro’s general manager and other officials of irregularities with the arrangement, the whistleblower — not the supervisor who hired the man — was fired, according to an internal report by the transit agency’s Office of Inspector General.

Sara P. Wilson, then assistant general manager in Metro’s communications department, hired Marc M. Caposino, with whom she had worked at San Francisco’s transit system, in December 2009 after Mr. Caposino fell deeply into debt, the report said. Metro paid Mr. Caposino a $140,000 annual salary, a $10,000 signing bonus and $20,000 in relocation money in a move that was approved by General Manager John B. Catoe Jr. and Chief of Staff Shiva Pant despite multiple red flags.

Mr. Caposino was hired amid financial troubles for Metro that prompted a “reduction in force” and weeks after Mr. Caposino filed for bankruptcy. Just before taking the job, Mr. Caposino listed an annual income of $36,000 in public court documents, which also said his advertising company was worthless.

“Catoe and Pant approved the hiring solely based upon [Ms. Wilson‘s] recommendation and notwithstanding some negative information Catoe received. This personnel action was done against the background of [reductions in force] and projected large deficits,” according to the internal report, which was obtained by The Washington Times through an open-records request. The report added that the new hire’s workload was made up largely of responsibilities shifted from existing employees.

The report also said Mr. Caposino falsely listed a previous salary of $150,000 on his application, which no one at Metro verified. The hiring process from interview to acceptance took place within a span of four days, Mr. Caposino did not fill out an application until after he had accepted the job, and the bonus was paid even though the applicant had no other employment offers.

“Both Catoe and Pant thought that the signing bonus was unusual … but did nothing about it,” the report said.

A profile of Mr. Caposino posted on the social networking site LinkedIn claims that Mr. Catoe personally asked him to come work for Metro.

Mr. Caposino, whose name was redacted from the report but whose identity was widely known within Metro, did not return calls for comment.

Ms. Wilson’s name also was redacted from the report. Reached for comment, she said she disagreed with the inspector general’s findings and referred a reporter to a copy of a statement she filed with the inspector general in response to the report. The response notes that Mr. Caposino at the time he was hired had been helping to support his parents and that his ideas still could be used someday.

Ms. Wilson and Mr. Caposino have since left Metro, but it was not clear from the inspector general’s report the terms under which they departed.

A source with knowledge of the activities in the report, but who spoke on the condition of anonymity because of lack of authority to discuss the matter, said Ms. Wilson left Metro after Mr. Catoe announced his resignation as general manager in January 2010 and was replaced by Richard Sarles.

Mr. Caposino was briefly promoted to fill the void until Mr. Sarles brought in his own team. He now works as a spokesman for the D.C. Office of the State Superintendent of Education.

The inspector general’s report also points out contracting irregularities concerning Mr. Caposino prior to his hiring at Metro. It said the transit agency paid $68,000 for contracting work to a company in which Mr. Caposino held a 50 percent stake.

The company, Fresh Public, provided little to show for the money, which included $18,000 in funds from the 2009 federal stimulus. According to the report, that money paid for one presentation for a project that never materialized.

On another project, for which Fresh Public was paid $50,000, the company was tasked with spearheading a regionwide advertising campaign to boost morale of bus drivers. The company instead produced a single banner that hung in the Metro executive building, where bus drivers do not see it. The payment covered only the design, not the printing, of the banner.

The contracts were already a bone of contention, having prompted a complaint that reached the inspector general from a Washington-area business that said Metro was unnecessarily paying the California firm when Metro had an existing contract with a local advertising firm to handle such projects.

The inspector general determined that Metro used the existing contractor as a “pass-through” for the California firm to avoid a review of what amounted to a noncompetitive bid with Mr. Caposino’s firm. Transit officials increased the existing company’s contract amount so they could pay Fresh Public through an intermediary, the report said.

Metro essentially paid twice for the same task, and the local advertising firm ultimately produced the ad campaign targeting driver morale.

The report said the contract work could have been done in-house and was financed without review of the finished product.

It also said the written description of the project in Metro records had no connection to the project on which Mr. Caposino’s company had worked.

Further complicating matters, investigators said, Metro contracting information is kept in an unsecured filing cabinet in a hallway. The agency could not locate some records pertaining to the advertising contract.

About the time Metro moved to hire Mr. Caposino, a longtime employee in the communications department invoked Mr. Catoe’s “open door” policy in an attempt to meet with the general manager and blow the whistle on Ms. Wilson steering contracts to a friend.

But Mr. Catoe did not meet with the employee, identified in the report as Michael McBride, and instead told Ms. Wilson of the request. Mr. McBride was called to the supervisor’s office and was angrily accused of violating the chain of command, according to the report.

Weeks later, Mr. McBride was abruptly selected for termination as part of a reduction in force, even though his name wasn’t on earlier lists of employees to be laid off, according to investigators. The inspector general’s report said Ms. Wilson volunteered to inform him of the news personally and requested that police accompany her.

“During the notification, [Mr. McBride] claimed [Ms. Wilson] made a comment under [her]breath that this will teach him‘to mess with [me].’ However, no other person present at the time heard the comment,” the report said.

“The evidence supports [Mr. McBride’s] claim that he was RIF’d, in whole or in part, in retaliation for his complaints about [Ms. Wilson‘s] actions with respect to” the contracts, investigators concluded.

The transit agency rehired Mr. McBride after a Metro board member intervened because his work was considered indispensable.

Asked about the issues raised in the inspector general’s report, Metro spokesman Dan Stessel suggested in an email that the problems identified in the report were confined to the administration of Mr. Catoe.

“The key people involved are no longer employed at Metro. There are policies and procedures in place to prevent irregularities in hiring and procurement,” he said.

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